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1. The data file contains cost and output data for TVA non-hydroelectric plants in 2014. Use this data file to run a linear regression as specified below. Have the computer program plot the actual vs. predicted values of the dependent variable (in Excel, check the box marked "Line Fit Plots").

Dependent Variable: AVC

Explanatory Variables: Q, QSQ.

a. Which coefficients (including the constant) are statistically significant at the 10% level or better? Which are not significant?

b. How much of the variation in the dependent variable is explained by the estimated equation?

c. Is the equation as a whole statistically significant? At what level?

d. Is the estimated average variable cost curve U-shaped? Why?

2. a. Calculate the output quantity at which AVC is minimized.

b. Calculate the value of AVC at its minimum point.

c. Calculate the value of marginal cost at the quantity that minimizes AVC.

d. Calculate the estimated values of average variable cost at output levels of 5,000 and 15,000.

e. Calculate the estimated values for marginal cost at output levels of 5,000 and 15,000.

Attach copies of your regression output along with your answers.

Show your work on all calculations.

You may cooperate or work in groups to run the regressions. Groups may turn in one completed assignment identifying all students in the group. The regressions may be run in Excel or the statistical package of your choice (Minitab, etc.).

Attachment:- TVACostData14.xls

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91721718

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